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Lungelo Magubane is probably what former president Thabo Mbeki had in mind when he sought to build up a prosperous and confident black middle class.
The 30-year-old lawyer was recently named an associate at the SA arm of a global specialist in mergers and acquisitions, before which he served as group legal head at Robert Gumede’s IT firm, Gijima, and before that, at law firm Norton Rose Fulbright.
He is the type of citizen most countries strive to keep: educated, self-sufficient, ambitious … yet he is thinking of emigrating.
Sazi Enicker, engineer
How long have you been living in Zurich?
I have been here for a year.
What was your reason for leaving?
Before I knew my husband he was sent on an assignment to SA. After we had met and when his assignment ended, we thought that Zurich would be better for our careers and for financial reasons.
What are the three things you love most about Zurich?
The summer is exceptional. Zurich is also relatively close to nature. So a 30-minute train ride is all it takes to reach the mountains. The public transport is also almost perfect – very well integrated, and you can set your watch to it. Everything in the city is quality, and as a result everything is quite expensive. But the relatively high salaries mostly offset this.
What are the three things you find most difficult?
Being away from my friends and family – the first winter was extremely difficult for me. Christmas was cute and fun, but January to March were long, hard and grey.
It was also difficult to come to grips with my identity in a very white, ultra-privileged country. I miss hearing the laughter on the streets of African people and being able to see people around me who look like me – there are not many black people. I also miss being able to have access to the latest braid fashions at a good Braamfontein price instead of paying a fortune for mediocre styles. Ask any black woman: hair is a real struggle unless you are living in a country where there is a significant black population, like America or London. I also miss being able to relate to people on SA-type issues.
Do you rent or own property there?
We rent. No-one owns property in Zurich unless you are a Swiss millionaire or you have inherited a house from your parents or grandparents.
How do you rate property prices?
You can’t even compare. We live quite centrally in an apartment that would cost about Sf1.2m, which is about R16m. And the law states that you need 20% minimum deposit, which is about R3.2m.
What are your thoughts on the school system there? Is it expensive?
Kindergarten is quite expensive, as it’s not subsidised. For this reason, women usually stay at home longer, which isn’t good for their careers. Other schooling is subsidised, so it’s free, and for university you pay a small amount.
Do you use your own car or public transport or both?
We don’t own a car as we don’t need one. It’s quite easy to own a car, however, as everyone can afford the taxes and so on.
Do you make use of public spaces?
I would say public spaces, especially around the lakes and rivers in the city, are the best thing about Zurich.
Do you feel safer than you did in Johannesburg?
I don’t think there is a yes or no answer for me on this one. I definitely have my guard down more here, because Zurich is probably the safest place on earth.
How much is a dinner for two (with wine)?
The last time we went out, it was to an Italian restaurant. Two glasses of wine each, one pizza, one pasta cost us just more than R1,000.
Do you see yourself coming home?
Our long-term plan is to go back to SA. When we have children, for sure – it’s too expensive to raise them here and we would need a support system. Later in life we will definitely use our Swiss francs to buy a nice little place in SA.
— ZURICH
Magubane has structured his life in such a way that he owns neither a car nor a house – he Ubers everywhere and rents so that he can leave at a moment’s notice. He says: "If I felt there were a bright future … that I could be anything and everything I wanted to be, here, then I would stay."
Instead, the frustrations of government incompetence, corruption and economic decline that have marked the decade under Jacob Zuma’s rule are starting to tell.
"If I rewind to the presidency of Thabo Mbeki, there was a period where we really felt like we were in good hands. Maybe it was youthful exuberance," he says, "but you had Tito Mboweni, Trevor Manuel, the triumvirate of the TMs. Yes there were stuff-ups and I’m not going to try to sugarcoat his presidency, but I felt there was a plan. I feel we’ve lost that."
Magubane says that besides the problems with the way the country is run, there is also angst at the thought that there may be something better out there.
That angst is increasingly shared by a rising number of South Africans who have decided to leave their homeland. Reports suggest that the highest-yet number of people will move to other countries this year, though the department of home affairs says it keeps no records of people who emigrate.
However, according to a recent exhaustive report released by investment bank RMB Morgan Stanley, emigration is decidedly on the rise.
Statistics from favourite destinations like Australia imply that an average of 13,000 South Africans have left SA each year for the past 10 years — but that spiked to 36,000 in 2016. An estate agents’ survey tracked by FNB property strategist John Loos shows that 7.8% of all home sales in the first quarter were due to owners emigrating.
While these numbers may sound paltry in a population of 57.7 million, they take on a worrying significance given the size and composition of SA’s fragile tax base.
Emigrants are generally higher-income taxpayers with mobile skills, which SA and its dwindling finances can ill afford to lose.
While there are an estimated 14 million taxpayers, only 7.48 million earn more than R70,000 a year. That narrows to a mere fraction at the top end of the earnings table: just 109,783 individuals took home an income of R1.5m a year or more.
Mike Schüssler, a top statistician in the economics fraternity, has long argued that South Africans are among the most heavily taxed in the world — using an economic measure known as tax to GDP, which puts SA at eighth-highest worldwide.
Consider, too, that a middle-class citizen ends up paying for private schooling, private health care, private security, and insurance bills that far outpace the world norm given SA’s high crime and road accident rates, without deriving many tax breaks.
Our highest income tax rates also kick in at much lower salary thresholds than some First World countries. Using America as an example, you’d have to earn R6m there to pay 37% tax on your income; in SA, at R1.5m, you’ll pay 45% of that to the state.
Given a breakdown in municipal services, an estimated R100bn stolen by corrupt officials and businessmen in the Zuma years, and an inexplicable dearth of arrests of those responsible, this ruinously expensive public mismanagement is hardly an incentive for SA’s top earners to stay.
The exact figures are hazy, but America’s Pew institute estimates that almost a million South Africans have left the country since 1990.
Schüssler says: "At a minimum, our tax base on the higher-end would be 5% higher, if not a full 20% of people earning over R300,000" — had they not gone.
"We know from the OECD stats that at least 650,000 South Africans are overseas. We know from the British stats that around 200,000 South Africans are working in England and yes, some of them will be factory workers and many of them are nurses, but many are doctors, industrialists, people who have taken IT companies over there who could have done this in Cape Town."
However, while many have left, many have also arrived. Stats SA census data shows that SA has experienced "significant" rates of immigration, mainly from sub-Saharan African countries. The data shows 70,000 immigrants arriving every year between 2011 and 2016.
The problem is, they’re not as wealthy as those leaving. RMB Morgan Stanley says "the data suggests the migrant flows have had a net negative impact on total SA household expenditure" given the higher income of those leaving than those arriving.
In fact, they suggest that as much as 0.25% "may have been knocked off SA household consumption in 2017 and again this year", by the people leaving.
Stats SA data shows that SA’s population has increased at a compound annual rate of 1.6% for the past five years — making it the seventh-fastest growing of the MSCI emerging markets. Within the demographic groups that make up SA’s population — black, coloured, Indian and white — the black population has grown more quickly, at a compound annual rate of 1.8% while the white population has declined by 0.5% for the past five years, which RMB Morgan Stanley attributes to a low birth rate and emigration.
RMB expects emigration among whites to remain "a significant theme", citing SA’s high unemployment and affirmative action policies which "give rise to fear of insufficient job opportunities for white school leavers".
Irrespective of race, however, SA’s economic growth rate is nowhere nearly high enough to accommodate its population growth while making a dent in unemployment — now a staggering 37% if discouraged job seekers are included. That’s especially critical given that the growth in the working-age population has risen at an annual rate of 1.5% — the ninth fastest across the MSCI group of emerging markets.
SA’s economy has been stagnating for a decade. Between 2000 and 2008, SA was growing at an average 4.2% a year. Since then, it has struggled to breach 2%. This year, the Reserve Bank believes we’ll grow by 1.2% — way below the IMF’s global growth forecast of 3.9%
It paints a bleak picture for South Africans’ wealth relative to our global peers. And, to turn the screw further, as the rand depreciates, South Africans get even poorer.
Schüssler whips out possibly the most telling chart to reveal how SA has relentlessly fallen behind. In 1990, we were about 10% richer than the global average — now we are about 20% poorer than the global mean (see graphic on page 22). At the same time, the cost of living in SA has risen exponentially, due to the weaker rand, fuel taxes, and the hefty increases imposed by SA’s biggest economic risk: power utility Eskom.
Swiss bank UBS has an even niftier tool to track a country’s purchasing power against its benchmark of New York City.
The UBS data shows that up to 2015, SA — specifically, Johannesburg — held about 70% of New York’s purchasing power parity. Now, however, SA has fallen below the 50% mark. In UBS’s index of 77 countries, SA has dropped to 43rd place (see graphic on page 25).
Says Schussler: "Once you become poorer, skills look elsewhere."
The skills exodus is also having profound ramifications across the public sector, where skills are desperately needed
"We have only 1.8 doctors per 100,000, where the world average is 5.1," says Schüssler. "It’s very clear that we’ve lost quite a lot of medical staff — specialist nurses, psychiatric nurses through to the more qualified doctors. They become more movable."
The same appears to be the case with engineers, who are increasingly forced to look outside SA for work given the bloodbath in the local construction industry — due as much to shrinking private sector investment, as to a standstill in government building projects.
"It becomes more difficult to rebuild an industry like construction or health care once you’ve lost critical skills," says Schüssler. "The other problem that SA has is not just that skills are going: we’re stopping skills from coming in — and that is a part of the problem that these guys in government do not always see. It makes doctors more expensive than they should be, or engineering or construction, for example."
While home affairs has a public list of critical skills it hopes to attract (including such "necessities" as sheep-shearing, apparently) immigration lawyer Chris Watters describes the process of obtaining a critical skills visa in SA as capricious, at best.
Christie Otto, physiotherapist
How long have you been living in Perth?
We have been here for 18 months. We recently applied for a permanent residence visa, as we have decided to stay indefinitely.
What was your reason for leaving?
We came to Perth for a one-year stint originally. The intention was to return to Cape Town after my husband, Flip, had completed his cardiac radiology fellowship.
Why did you remain in Perth?
Flip was offered a permanent job.
What are the three things you love most about the city?
It is a very clean, organised and beautiful space in which to live. It’s a family-friendly city and there are endless opportunities for recreation. There is good public transport: Flip uses buses and trains, and loves it. Traffic is also much lighter than in Cape Town.
And the three things you find most difficult?
The hardest is missing family and friends and not being there for special occasions and milestones. My father-in-law died suddenly last year, and we hadn’t seen him in six months. Racing back for a funeral is not a trip you ever want to make.
We also miss luxuries such as eating out – alcohol and forms of entertainment such as movies and concerts are expensive. So is child care: crèche costs A$130 a day. Because of this most women don’t work, or work part-time only, when they have small children.
Compared with SA, how do you rate property prices?
Rent is reasonable. Buying property is expensive, but interest rates are low, so repayments are roughly the same.
What are your thoughts on the school system there? Is it expensive?
Full-time free schooling only starts at five years old. Babysitting is A$25 an hour.
Is food shopping in Perth really expensive? And clothes?
Groceries are roughly the same as in SA. Petrol is R15/l at the moment.
Do you feel safer than you did in SA?
It’s very safe; I go anywhere I please whenever I like, and I feel my children are safe, and not just from crime – things such as road safety are top priorities here. This is a law-abiding society.
My two-cents worth is that I would not advise people to emigrate out of fear or to flee SA’s problems. The world is complex in 2018, and every place has its issues. Make a decision based on where you truly believe you and your family will be happy and will have a good quality of life.
— PERTH
"The key requirement to get in on a scarce-skills visa is that you prove you have the skill, and you have to be a member of some professional body. Unfortunately both are a lot easier said than done," he says. This is particularly tricky if your skill happens to be in something like boilermaking or welding, where professional bodies don’t exist.
There seems to be confusion, even in the home affairs department, over what constitutes "scarce skills".
Says Watters: "I had a client who came in from a neighbouring state on a scarce-skills visa issued by the embassy and when he applied for its extension, home affairs said: ‘the embassy should not have issued you with the visa, you do not qualify’."
For example, for the call-centre industry, scarce skills includes people who can speak various other languages like French, German or Portuguese. But the visa applies only to those who use those language skills within a call centre. So, if you find a job outside the call-centre industry, you no longer qualify for that scarce skill and your visa is no longer valid.
"You actually cannot find what the rules are," says Watters. "They keep tweaking the system but without letting you know. And if your skill is as a tradesperson — if you’re a welder — it gets very hard to prove the trade skills. It’s something they never considered."
As an immigration lawyer, Watters deals mainly with foreigners keen to settle here — be it for work transfers or to retire. He says that despite the obstacles thrown up by home affairs, and an increasingly toxic political environment, they’re still coming.
"You get entrepreneurs who want to use this as a base for Africa and retired families who feel they can stretch their money far better here," he says.
SA’s weather remains a huge drawcard, too. Watters also consults locals who want to leave. In previous years, Jacob Zuma’s dismal state of the nation addresses would routinely cause a spike in inquiries. "Some days we would get a dozen or two dozen inquiries and then things would settle down … they would go and have a braai, or go fishing and think, hell it’s not so bad."
Watters says the typical profile of someone looking to leave is that they’re in their 30s or 40s with an established career and children. They’re people who are "worried about the future of their careers and kids and don’t want to find themselves here with a wrecked economy", he says.
He says the ANC’s decision to push ahead with changing the constitution to make land expropriation without compensation more explicit, has become "a big issue".
Another push factor is the "screw Mandela phenomenon", typically espoused by leaders of the EFF, for whom racist anti-white, anti-Indian utterances are increasingly the norm.
Watters says 50% of those who approach his firm looking to leave SA are white, but the rest are coloured and black families: "It’s across the spectrum."
Magubane says the stereotype that it’s just white people leaving is inaccurate.
"You make this distinction of white and black people," he says, "but I think on a class level, the interests begin to align a lot closer than people might want you to think. As a taxpayer you look at how much you’re giving to the state and how much you’re getting back."
Magubane is disarmingly objective. "Now, as a black person perhaps I can say: here’s a village I knew 15 years ago and it’s now electrified, it has a tarred road and services are slowly coming to them. It’s gratifying to see. And I know more could have been done, there’s a lot of wastage, but as a white person whose family, perhaps, has lived in a suburb, how do you track the value you get out of the state? Your kids are in private school, you have private health care, you have your own private security company."
However, Magubane’s main push factor is that he wants to prove himself on a wider stage, where he can be tested.
"Yes, maybe I’ll come back and join some aspect of the state and give back. That is something that a black person might feel strongly about: to be part of the change. But at the moment I personally [think], do I really want to be in a state department where my superior doesn’t have the faintest idea of what’s going on? ... You can’t be a proud civil servant when you’re seeing what is being exposed."
People polled by the FM say the toxic environment at universities has also become a concern for parents who wonder whether to leave while their children are small and get them into an education stream abroad.
Last week it emerged in parliament that the damage caused by #FeesMustFall protesters cost universities almost R800m as libraries, laboratories and buildings were torched and vandalised in the 2016 protests.
The movement achieved its aim: fee-free higher education for first-year students, but at an enormous cost to the fiscus — an extra R57bn to this year’s budget, and one of the reasons behind SA’s unpopular VAT hike.
The DA’s spokesperson for higher education, Belinda Bozzoli, described the aggression around the protests as "a sign of a very serious breakdown in the social contract, and testimony to the fact that our institutions of learning have become unpleasant and often frightening places to learn and teach".
This is evident from statements by the family of celebrated cardiologist and UCT health sciences dean Prof Bongani Mayosi, who blamed his suicide on the #FeesMustFall protests. The university has now launched an inquiry into his death.
To some extent, the fees protests were the culmination of years of strain on SA’s universities. Ahmed Bawa, a theoretical physicist and CEO of Universities of SA, says: "While our student numbers have doubled between 1994 and now, the number of academic staff has remained the same."
Describing universities as less well-funded than in the past, Bawa says universities are finding it very difficult to hire enough people to keep pace with the galloping student numbers. "Many young academics are finding it difficult to cope with the instability and breakdown in learning culture, and that’s something we have to work very hard to rebuild."
Asked whether SA’s dysfunctional basic education and underfunded tertiary education systems mean that SA is at a tipping point, Bawa says "it’s not clear" whether SA is headed towards a skills crisis, which could feed into a toxic mix of lower growth, a weaker economy and skills migration.
"If you look at the grade 12 results, the number of young people coming through the system with mathematics above 50% is dismally small. So the challenge is multi-faceted: the universities have to work with underprepared students and make sure that there is support for them, but all of that costs money and time and it’s not what universities should be doing," he says.
The problem begins at the basic schooling level — and so far there’s no sign this is improving at all in critical disciplines.
This chimes with what Dianne Ennis Stewart, owner of relocation agency PathWay USA, hears when she asks prospective clients why they want to move to the US.
SA looks likely to lose more and more of its higher-income taxpayers, with no turnaround in sight
— What it means
Their aim is to get their children a world-class education, she says.
"Unfortunately, to live and work and practise as any kind of professional in the US, you really need to have an American degree. And so once you’ve got an American degree you can work anywhere in the world."
The second most pressing issue for prospective leavers that she is hearing is concern over SA’s economic and political future, and third, locals who want to expand their businesses overseas. "Some businesses have reached their limit in this country and they see the US as the biggest engine in the world, so they gravitate towards that."
Ennis Stewart, who works with the American Immigration Lawyers Association, is especially fond of what she calls the "Rolls-Royce" of US visas — an EB5 investment visa which will ensure a green card for the applicant, their spouse and any children under the age of 21, in two years.
The catch is that it costs $500,000 or R7.2m at today’s exchange rate.
Despite the price, Ennis Stewart says she’s been flooded with inquiries recently. In 2017, 57 of these EB5 green cards were issued by the US consulate in SA.
She is a South African, but has lived in the US for the past 20 years. She comes back home regularly to hold relocation seminars.
On her most recent trip back, she says she spoke to more than 500 people. "Normally I would guess we have about 50-60 people coming to a seminar, we’re now looking to 100, 150, sometimes even 200. I have two cellphones in SA and they do not stop," she says.
Louise Hildebrand, creative director
How long have you been living in Frankfurt?
I have been here for four years.
What was the reason for leaving?
Heartbreak.
What are the three things you love most about Frankfurt?
It’s a medium-sized city that is bicycle-friendly and has a river running through it, it’s a central transport hub with cheap, direct access to the rest of the continent and it’s very chilled: the Germans take work-life balance very seriously. I have just completed 12 months of maternity leave.
What are the three things you find most difficult?
The sometimes rigid arrogance in the way Germans approach other nations; Abendbrot (evening bread) – it is truly the most depressing culinary tradition; and the customer-unfriendly consumer services, such as banking and subscription renewals.
Compared with SA, how do you rate property prices?
I don’t know anyone who owns property here. Germans are the highest renter group in Europe.
What are your thoughts on the school system there? Is it expensive?
A full-time public kindergarten-nursery that includes three meals a day costs around €300 a month. University is free. Private and international schools are another story, and are largely unaffordable.
Do you use your own car or use public transport – or both?
Public transport is a pleasure here. Everything is accessible and runs on time. We use bikes in summer, though. We are also part of a car-share system for when we need longer trips.
Do you make use of public spaces?
We go to the riverside all summer long and take walks or have drinks or picnics along the promenade.
Is food shopping in Frankfurt expensive?
No, Germany has the lowest food prices in Western Europe.
Do you feel safer than you did in Johannesburg? Or in the UK?
Unfortunately, yes. Walking alone through a park at night with headphones is just not a thing one can do in Johannesburg.
How much would a Friday night dinner for two (with wine) cost?
A fancy date night with all the frills: €300. A normal Tuesday night dinner: €80.
What do you miss most about SA?
The warm weather and the warm people; smiling, laughing faces in the street; and real customer service.
Do you see yourself coming home?
No.
— FRANKFURT
Ryno Viljoen, whose company FinGlobal specialises in financial emigration, says: "This month we’ve had the biggest number of leads that we’ve ever had."
Viljoen attributes this, largely, to fears over land expropriation. He started FinGlobal in 2009 and was bought out by Bidvest last year, after becoming involved with Bidvest Bank as its forex partner in 2014.
His business revolves around cashing in retirement annuities for those who have left the country but who want to access the funds in their retirement annuities. Normally, you’re not allowed to access these funds until the age of 55.
Getting out and into a new country, however, is the biggest challenge for those who don’t have access to a second passport, ancestral visa, or deep pockets.
The US, for example, has more than 40 different visas for would-be visitors. But Ennis Stewart says "not all of them are immigrant, which means they are expecting you to come back."
Buying your way into the US through the EB5 programme may sound prohibitive, but there are other European citizenship-by-investment programmes that do the same thing. And while some countries take a less mercenary approach — Australia and New Zealand work on a points system to import skills, for example — other countries have embraced the market of passport sales.
"It’s a big thing in Caribbean countries," says Watters. "If you invest in a condominium on the coast or government bonds you get a passport, which will cost you about $150,000 or $200,000." One country in particular — Grenada — will give you visa-free access to the US, the EU and China.
For every South African leaving, there are some who want to come home. The key to getting them back, however, is a resurgent SA economy.
Angel Jones, who started the Homecoming Revolution — initially to help African expats return but which has now branched out into recruitment — says: "There’s no question that the desire to return to SA is there, but the jobs aren’t. If the economy were pumping and there were jobs just waiting everywhere, I really think that that flood would happen."
With Sarah Buitendach
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